Russia sells copper to China under the guise of scrap

“Russkaya Mednaya Kompaniya” sells copper wire under the guise of scrap to Chinese companies, which allows them to save on taxes and avoid the consequences of Western sanctions. This is reported by the Reuters agency.

The Russian export duty on copper wire in December last year was 7 percent, and the duty on scrap was 10 percent. In China, no duty is levied on the import of scrap metal from Russia, while the duty on copper wire rod is 4 percent.

According to Reuters sources, the copper rod was crushed by an intermediary in the Xinjiang Uyghur Autonomous Region so that it would be difficult to distinguish it from scrap. The interlocutors said that this allowed both exporters and importers to profit from the difference in tariffs.

Reuters draws attention to discrepancies in the customs data of Russia and China. According to Chinese customs data, since December, China has bought significantly more copper scrap from Russia. At the same time, Russian data showed that the volume of scrap exported to China was insignificant, and in December there was a sharp increase in the export of wire rod.

“This scrap from Russia is de facto a copper rod, but it is not declared as a rod. I cannot disclose more detailed information,” a Chinese source told Reuters on condition of anonymity.

The Russian customs publication stated that they “temporarily do not provide data on foreign trade”. “Russian copper company”, which is under Western sanctions, said that it supplies products only to Russian companies. China’s Xinjiang customs office did not respond to Reuters’ request.

After the United States imposed sanctions against Russia, China became the main destination for Russian companies seeking to export their products. The United States and the European Union also imposed sanctions against a number of Chinese companies for supporting Russia.

As Reuters notes, there are no legal obstacles for Chinese companies to purchase metal from Russian firms that are under sanctions. However, they may still fear that because of this they will lose customers who want to avoid providing any funds to Russia. Difficulty with payment processing is also one of the consequences of sanctions.